The update with regards to impact of the coronavirus COVID-19 epidemic on activity of Bank Polska Kasa Opieki S.A. and its capital group

In reference to the current report No. 9/2020 dated 25 March 2020, Bank Polska Kasa Opieki Spółka Akcyjna (the “Bank”) hereby provides an update with regards to impact of the coronavirus COVID-19 epidemic on operating activity, financial results and outlook for the Bank and its capital group (the “Group”).

As referenced in the current report No. 9/2020 dated 25 March 2020, one of the factors that will have a significant impact on the financial results of the Bank and the Group in 2020 have been recent decisions of central banks to reduce interest rates, including mainly the decision of the Monetary Policy Council in Poland to reduce the reference rate on 17 March 2020 and 8 April 2020 (by 100 basis points combined to the level of 0.5%). Above-mentioned decisions will lower the net financial result of the Group in 2020 by about PLN 450-500 million as a result of lowering the interest margin by about 30 basis points. The precise impact of the above-mentioned decisions on the financial results will depend on the shape of yield curve as well as on the implementation of business plan assumed by the Group

Simultaneously, the Bank assumes that a negative impact of lower economic activity in Poland (as a result of the coronavirus COVID-19 epidemic) on the level of costs of risk for the Group in the first quarter of 2020 will be around PLN 200 million. The above-mentioned provision for expected worsening of credit portfolio quality will be recognised in the consolidated financial statements for the first quarter of 2020. The provision was estimated based on macroeconomic scenarios that assume an economic recession in Poland in 2020. The Bank expects that the consolidated net profit in the first quarter of 2020 will be lower compared with the consolidated net profit reported in a comparable period of the last year, among others as a result of the above-mentioned provision. 

The Bank indicates that the above assessment of the impact of the COVID-19 coronavirus epidemic on the activities, financial results and outlook of the Bank and the Group has been based on the best knowledge of the Bank as at the date of publication of this current report. The Bank will present updated information on the impact of the coronavirus COVID-19 epidemic on the operating activity of the Bank and Group in the interim report for the first quarter of 2020.

Legal basis:
Article 17 (1) MAR – inside information